IFCI sells Unitech's pledged shares

IFCI, a state-run financial institution, today sold Rs 51.7 crore worth shares of Unitech, the nation’s second-biggest property developer, as the promoters of the company failed to repay loans raised against pledged shares.

IFCI sold 17.5 million shares of the Delhi-based realty developer at Rs 29.52 each on the National Stock Exchange, according to data released by the bourse. The sold shares are about 1.1 per cent of the company’s share outstanding. Unitech Managing Director Sanjay Chandra did not respond to calls and messages. The company spokesperson also did not respond.

The sale of shares comes three days ahead of an extraordinary general meeting called by the company to raise about Rs 5,000 crore to meet its financial obligations.

Analysts say the Unitech promoters have been periodically pledging shares since March last to raise money. The sale obviously indicates that the promoters haven’t been able to raise money, an analyst said. The promoters had borrowed Rs 200 crore from Indiabulls Financial Services, which was repaid in November. Analysts believe about 8 per cent of the promoter shares are pledged with lenders. One of the non-banking finance companies (NBFCs), DBS Chola Finance, had on December 24 sold 12.8 million, or 0.8 per cent, of Unitech’s outstanding shares.

The share sale also comes a few days after Fitch Ratings downgraded both the long-term and short-term debt programme of Unitech on concerns over the company’s ability to service debt.

Unitech has restructured about Rs 1,000 crore of bank loans. IT is in talks with banks to restructure additional Rs 500 crore of debt.

Unitech shares fell 5.5 per cent and closed at Rs 30.10 at the close of trading today.

Fitch downgraded Unitech’s Rs 4,400-crore long-term debt to ‘B’ from ‘BBB’ earlier, and Rs 1,200-crore short-term debt and bank loans to ‘F4’ from ‘F3’. Unitech needs to pay Rs 1,100 crore in January and a total of Rs 2,500 crore by March, mostly to mutual funds, banks and financial institutions.

The Chandra family-promoted Unitech has over Rs 8,000 crore debt on its books. ‘’The downgrade reflects the company’s continued delay in raising required funds as projected earlier and increasing uncertainty regarding its ability to service interest cost and fulfill its immediate debt/ land payment obligations,’’ Fitch had said in its statement.

Though the company is in talks with private equity firms and banks to raise funds, Fitch said the timing and quantum of funds to be raised remains uncertain.

“While the company has made some progress on its asset sales and fund raising from other sources, the quantum and timing of these remain uncertain, increasing the risk of delays in servicing its debt obligations in a timely manner,’’ the agency said.